Technics Oil & Gas

Technics Oil & Gas: posted a $8.6m loss in 4QFy13 and record $9.9m loss for FY13, below DMG’s already lowered estimates. FY13 revenue sank 73% yoy to $41m, partly due to the deconsolidation of the Norr Offshore Group, but the 44% qoq fall is more worrying. The group stopped updated its orderbook in 4Q12 and the trend looks to continue. the low volume of contracts won in the last 12 mths amid a global glut of fabrication yard space and intense price competition cloud Technic’s outlook. DMG forecasts breakeven core profits going fwd while highlighting downside risks. Meanwhile Technic’s negative FY13 EBITDA may hamper its ability to borrow or issue notes, which is necessary to build its new capital –intensive asset-leasing business. No dividends were declared this year, as expected. DMG keeps at Sell, notes the market is overly optimistic on the disposal value of Technic’s stake in Norr. DMG’s SOP-based $0.58 TP assumes a 15x disposal P/E of Norr (vs its trading 16x P/E in Taiwan) and 2.3x P/B of Technic’s core book value.